By Mike Keerma
North American stock markets advanced marginally on the week, closing an uninspiring and volatile September, but posting solid third-quarter gains overall.
Last week saw markets react to signs that Opec may implement a production cap in coming months. Crude oil prices surged by $3 per barrel on the week, climbing
7.4% to US$47.98 per barrel, lending support to the flagging S&P/TSX Composite Index, which nevertheless managed to
eke out a 0.2% gain on the week. Rumors swirling about the financial stability of German banking giant Deutsche Bank AG also abated by the end of the week,
as the S&P 500 Composite Index rallied to end the week
with a hairline advance of 0.2%, while the Nasdaq Composite Index edged up 0.1% on the week.
A surprise consensus (but no formal agreement) by members of the Organization of the Petroleum Exporting Countries (Opec) to attempt to work out a plan to
cut crude oil production at their next meeting in November revived the energy sector, giving stock markets a mid-week boost. Toronto’s benchmark
S&P/TSX Composite Index, which is heavily weighted to natural resources, particularly energy, virtually mirrored the advance in crude oil prices on the
week, as seen in the graph below.
The other main contributor to market volatility last week was a rumor that the German government was preparing to bail out banking giant Deutsche Bank AG
over a proposed US$14 billion fine levied by the U.S. Justice Dept. to settle various mortgage securities probes. However, things cooled down by the end of
the week, with all parties denying that any sort of bailout was in the works or indeed that Deutsche Bank was in a kind of stress to begin with. Deutsche
Bank indicated its capital position was strong, that it was selling non-core assets, and that it would deal with the U.S. Justice Dept. on its own,
indicating it would fight the fine, and would not pay the full amount in any case.
In other business news, Canadian tech company BlackBerry Ltd. (TSX: BB) powered down on its iconic
smartphone last week, when it announced it would stop making the mobile phone handsets and get out of its money-losing hardware business altogether. Citing
increasing competitive pressures and thin margins, BlackBerry CEO John Chen said that the production and distribution of the iconic BlackBerry smartphone
brand would be licensed to outside producers, with BlackBerry focusing on software.
Energy utility Northland Power Inc. (TSX: NPI) got a
boost last week when it announced it was actively seeking a buyer. With a value of about $4 billion, the company operates thermal and renewable energy
facilities in Canada and Europe, and expects adjusted earnings before interest, tax, depreciation, and amortization to double by 2018 from last year’s $402
million. Share prices jumped about 2.8% on the week.
Belgian beer giant Anheuser-Busch InBev SA (NYSE: BUD)
(whose brands include Budweiser, Corona, Stella Artois, Beck’s) completed its takeover of British rival SABMiller Plc (OTC: SBMRY) as SABMiller’s shareholders
voted overwhelmingly to accept the deal worth US$102 billion. SABMiller brands include Foster’s, Miller, and Pilsner Urquell. The combined company will
continue under the AB InBev name.
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